Savory deals and a brighter job picture prompted shoppers to
spend more freely in July, leading to solid sales gains for
retailers, it was reported on Thursday.
But the jury is still out on how retailers will fare during
the back-to-school shopping season, which moves into high gear
July sales at stores open at least a year rose 4.8% vs. a year
earlier, according to Ken Perkins, president of Retail
Analysts were expecting a 4.5% gain.
Perkins says he wasn't surprised at the results, given that
they were roughly in line with expectations.
An "encouraging and positive development," he said, is that
apparel retailersL Brands (
) andZumiez (
) posted better-than-expected July results.
Perkins sees only "modest sales gains" for clothing retailers
in back-to-school and the latter half of the year amid heavy
competition and promotions.
"I expect apparel sales to be sluggish through the second half
unless the fashion really turns around," he said.
Recent surveys don't bode well for apparel retailers. The
surveys suggest that apparel ranks below electronics and school
supplies as priorities for back-to-school purchases, Perkins
He expects overall back-to-school selling to be promotional,
with the industry showing modest sales gains in the low single
"The state of the consumer mindset is one of caution," Perkins
said. "The consumer is deal-oriented and value-focused and really
looking for the ability to shop whatever is most convenient for
them -- whether in stores, mobile, desktop or tablet -- and be
able to pick it up in the store or have it shipped to their
Perkins doesn't see any catalyst that would cause a
"significant spike" in consumer spending for the back-to-school
season and the back half of the year.
"The jobs market has improved, but wages have yet to follow
suit," Perkins said. "Until they do, higher spending levels are
unlikely, and there will be more of the same sluggish slow
Michael Niemira, a consultant with the International Council
of Shopping Centers, is more upbeat about the back-to-school
shopping season and the retail outlook overall.
"We're starting to see a somewhat better economic performance,
and the labor markets have improved, with the jobless claims
looking much more healthy," he said. "All that bodes well for the
near term, and it particularly bodes well for the back-to-school
He calculates that retailers posted a 4.8% rise in July
Based on recent results from the ICSC-Goldman Sachs weekly
chain-store sales index, early back-to-school buying looks
strong, said Niemira: "I suspect that (strength) will play out
for the month of August as a whole."
He sees August same-store sales rising 4% to 5% from a year
earlier, and he projects total July, August and September sales
of back-to-school items such as electronics and family clothing
to be the strongest since 2010.
Most retailers reporting monthly fared well in July.
Perkins calls the showing "decent."
He added: "Clearly, promotions were pretty robust throughout
the month, providing incentive for consumers to shop. The weather
was decent throughout the month, and the job market has been
improving, though wage gains have not been what we'd like them to
Wait And See
Perkins adds that July is not a key month for the second
quarter, since retailers are focused on clearing out summer goods
to make room for early fall and back-to-school merchandise.
"We will see how they do in August," he said.
Like Niemira, Perkins estimates that August same-store sales
will rise 4% to 5% vs. a year earlier.
Victoria's Secret parent L Brands led the pack in July with a
hefty 6% gain in same-store sales for the month, well ahead of
forecasts for a 1.8% increase.
The company also said it expects to report second-quarter
earnings at the high end of its previous guidance of 57 cents to
62 cents a share.
Warehouse club giant and typical top performerCostco (COST)
posted a 5% rise in July same-store sales, slightly short of
views for a 5.2% gain.
Still, Perkins called it an "excellent" month for Costco,
which has surprised on the upside the past several months.
Meanwhile, apparel chain Gap posted a 2% rise in July
same-store sales, ahead of views for a 0.6% gain.
Value-priced apparel retailer Cato saw a 4% gain in July
same-store sales, topping forecasts for a 1.5% increase.
Action sports retailer Zumiez turned out a 3.5% rise in July
same-store sales late Wednesday, well ahead of forecasts for a
Perkins said Zumiez is "best placed" among the publicly traded
teen-apparel retailers to perform the best for back to
He cites the fact that the other teen-apparel retailers --
includingAeropostale (ARO),American Eagle Outfitters (AEO)
andAbercrombie & Fitch (ANF) -- are expected to post a
decline in same-store sales for the second quarter.
Teen-apparel outfit Buckle logged a 0.5% rise in July
same-store sales, sailing past views for a 0.7% decline.
Drugstore giantWalgreen (WAG) posted a 5.2% gain in July comps
on Tuesday, in line with forecasts.
Last week, rivalRite Aid (RAD) reported a same-store sales
increase of 4.6% for July, beating views for a 3% gain.
On the downside, regional discount chainStein Mart (SMRT) saw
a 0.8% rise in July same-store sales, well below estimates for a
PriceSmart (PSMT), which owns and operates U.S.-style
membership shopping warehouses in Latin America and the
Caribbean, posted a 1.8% increase in July same-store sales,
slightly short of views for a 2% increase.